T-Mobile USA Reports Second Quarter 2012 Operating Results

Adjusted OIBDA increased 4.8% year-on-year to $1.3 billion in the
second quarter of 2012

Adjusted OIBDA margin improved 3 percentage points year-on-year to 31%
in the second quarter of 2012

Total service revenues of $4.4 billion in the second quarter of 2012
compared to $4.4 billion in the first quarter of 2012 and $4.6 billion
in the second quarter of 2011, a decrease of 5.2% year-on-year

Branded contract churn of 2.10% in the second quarter of 2012; 40 bps
decrease quarter-over-quarter and 50 bps decrease year-on-year

Net customer losses of 205,000 in the second quarter of 2012 compared
to 50,000 net customer losses in the second quarter of 2011

Branded contract net customer losses of 557,000 in the second
quarter of 2012, compared to 510,000 branded contract net customer
losses in the first quarter of 2012 and 536,000 branded contract
net customer losses in the second quarter of 2011

Strong branded prepaid net customer additions of 227,000 in the
second quarter of 2012 compared to 71,000 branded prepaid net
customer losses in the second quarter of 2011 and branded prepaid
net customer additions of 249,000 in the first quarter of 2012

Branded contract ARPU increased slightly year-on-year to $57.35 in the
second quarter of 2012

Branded contract data ARPU increased 14.6% year-on-year to $19.16 in
the second quarter of 2012

Branded prepaid ARPU increased 13.6% year-on-year to $26.81 in the
second quarter of 2012

3G/4G smartphones sold increased 31% year-on-year to 2.1 million in
the second quarter of 2012

Solid progress on key strategic initiatives, including plans to expand
network coverage and rollout LTE service in 2013

August 09, 2012 01:00 AM Eastern Daylight Time

BELLEVUE, Wash.--(BUSINESS WIRE)--T-Mobile USA, Inc. today reported second quarter 2012 results. In the
second quarter of 2012, T-Mobile USA reported adjusted OIBDA of $1.34
billion, up 4.8% from $1.28 billion reported in the second quarter of
2011. Net customer losses were 205,000 in the second quarter of 2012,
compared to 50,000 net customer losses in the second quarter of 2011.

“In the second quarter, T-Mobile USA continued to show considerable
progress in a number of key areas delivering solid adjusted OIBDA
growth. While we reported encouraging branded contract and branded
prepaid churn improvements in the quarter, we remain focused on customer
loyalty as we continue to execute against our strategy,” said Jim
Alling, Interim CEO and President of T-Mobile USA. “Looking ahead,
T-Mobile USA will continue to invest in a number of key areas including
the modernization of our network as we pave the way for LTE service in
2013, retail expansion, as well as an increased investment in promoting
our brand.”

“In the second quarter T-Mobile USA started the implementation of key
initiatives, such as network modernization, which will improve its
competitiveness going forward,” said René Obermann, CEO of Deutsche
Telekom. “We are also encouraged by the strong cost discipline
demonstrated by T-Mobile USA.”

T-Mobile USA Strategic Initiatives Update

T-Mobile USA continues to execute on its key strategic initiatives,
which include its $4 billion 4G network evolution plan to expand its
voice and data coverage around the country and to initiate long term
evolution (“LTE”) service in 2013. In the second quarter of 2012,
T-Mobile USA announced an agreement with Verizon Wireless for the
purchase and exchange of certain Advanced Wireless Services (AWS)
spectrum licenses (subject to regulatory approval), which would improve
T-Mobile’s network coverage in 15 of the top 25 markets in the U.S.;
completed the AT&T deal break-up AWS license transfers that will expand
T-Mobile’s coverage in 12 of the top 20 U.S. markets; and announced a
spectrum exchange agreement with Leap Wireless International, Inc. that
will further 4G coverage in four states. In addition to these spectrum
agreements, T-Mobile USA announced multi-year agreements with Ericsson
and Nokia Siemens Networks to deploy state-of-the-art LTE-capable
equipment at 37,000 cell sites in 2012 and 2013.

T-Mobile USA increased its distribution channels in the second quarter
of 2012 announcing the opening of its 1,000th T-Mobile
Premium Retailer (TPR) store. In addition, a new distribution
arrangement with Dollar General Corporation brings an affordable phone
and convenient access to T-Mobile’s prepaid and Monthly4G™ No Annual
Contract service to more than 6,400 Dollar General stores. In total,
T-Mobile USA added approximately 8,700 prepaid doors in the second
quarter of 2012. To expand its reach in the business-to-business market,
T-Mobile USA began offering two new suites of mobile broadband data
plans to address the growing use of mobile broadband devices and the
increasing demand for data among business customers. T-Mobile USA also
launched its “Open Europe” plan for business customers – a new unlimited
data feature with a flat-rate monthly fee. The Company also signed two
additional agreements with Mobile Virtual Network Operator (“MVNO”)
partners in the quarter to drive further expansion into this customer
segment.

T-Mobile USA further expanded its portfolio of compelling 4G smartphones
in the second quarter of 2012. T-Mobile USA became the first U.S.
carrier to offer the 42 Mbps-capable HTC One™ S and also launched the
highly anticipated Samsung Galaxy S™ III. In addition to these devices,
T-Mobile USA also launched the T-Mobile® Prism™, a
budget-friendly option for cost-conscious consumers and expanded
T-Mobile's myTouch® family with the announcement of the
next-generation T-Mobile® myTouch® and T-Mobile®
myTouch® Q, launched in July 2012. In early August, T-Mobile
USA launched the Samsung Galaxy Note™, featuring a 5.3-inch HD Super
AMOLED™ screen. The Company is supporting its strategic investments with
its brand re-launch program, continuing with a new advertising campaign
that encourages customers to Test Drive T-Mobile USA’s competitive 4G
experience.

During the second quarter of 2012, T-Mobile USA continued to focus on
driving efficiencies across the business. Examples of this include the
new organizational structure announced in May 2012 that will enable the
Company to react with greater speed and effectiveness to customer and
market opportunities, that aligns costs with revenue realities, and that
better positions T-Mobile USA for growth. The Company also continues
with its efforts to drive operational efficiencies with the Reinvent
program and is well on track to achieve $900 million in gross savings,
which will be partially reinvested into customer acquisition programs.
Lastly, the multi-year churn reduction program showed encouraging
progress in the second quarter of 2012.

Customer Results

Quarter to Date

June 30,

March 31,

June 30,

Y-o-Y

(thousands)

2012

2012

2011

%∆

Customers, end of period2

Branded contract customers

21,300

21,857

23,463

(9

%)

Branded prepaid customers

5,295

5,068

4,345

22

%

Total branded customers

26,595

26,925

27,808

(4

%)

M2M customers

2,786

2,691

2,321

20

%

MVNO customers

3,787

3,756

3,456

10

%

Total wholesale customers

6,573

6,448

5,777

14

%

Total T-Mobile USA customers, end of period

33,168

33,373

33,585

(1

%)

Thereof, contract Customers

24,086

24,548

25,784

(7

%)

Thereof, prepaid Customers

9,082

8,824

7,801

16

%

Net customer additions/(losses)2

Branded contract customers

(557

)

(510

)

(536

)

(4

%)

Branded prepaid customers

227

249

(71

)

nm

Total branded customers

(330

)

(262

)

(608

)

46

%

M2M customers

95

262

256

(63

%)

MVNO customers

30

187

302

(90

%)

Total wholesale customers

125

449

558

(78

%)

Total T-Mobile USA net customer additions/(losses)

(205

)

187

(50

)

nm

Thereof, contract net customer additions/(losses)

(462

)

(248

)

(281

)

(64

%)

Thereof, prepaid net customer additions/(losses)

257

436

231

11

%

Note: Certain customer numbers may not add due to rounding.

Total Customers

T-Mobile USA served 33.2 million customers at the end of second quarter
2012, compared to 33.4 million customers at the end of first quarter
2012 and 33.6 million customers at the end of second quarter 2011.

Second quarter 2012 net customer losses of 205,000, compared to net
customer additions of 187,000 in the first quarter of 2012 and net
customer losses of 50,000 in the second quarter of 2011.

The sequential and year-on-year decrease in net customer additions
was driven primarily by a decrease in wholesale net customer
additions from fewer MVNO gross customer additions and increased
churn from machine-to-machine (“M2M”) customers.

Branded Customers

Branded contract net customer losses, excluding M2M, were 557,000 in
the second quarter of 2012, compared to 510,000 net customer losses in
the first quarter of 2012 and 536,000 net customer losses in the
second quarter of 2011.

Sequentially and year-over-year, the increase in branded contract
customer losses was driven primarily by fewer branded contract
gross additions related in part to credit optimization initiatives
and fewer new handsets launched in the second quarter of 2012.
Additionally, gross additions were also impacted by slowing
industry gross additions in the second quarter of 2012. This was
partially offset by improvements in branded contract deactivations
largely a result of churn reduction initiatives. The strategic
phase-out of discontinued products, which historically had higher
churn, also helped benefit the year-on-year improvement in branded
contract deactivations in the second quarter of 2012.

Branded prepaid net customer additions, excluding MVNO customers, were
227,000 in the second quarter of 2012; down slightly from first
quarter 2012 branded prepaid net customer additions of 249,000 and
improved from 71,000 branded prepaid net customer losses in the second
quarter of 2011.

The year-on-year improvement in branded prepaid net customer
additions was due primarily to increased branded prepaid gross
additions, a result of the continued popularity of unlimited
Monthly4G plans compared to traditional contract plans.

Wholesale

M2M net customer additions were 95,000 in the second quarter of 2012,
compared to net customer additions of 262,000 in the first quarter of
2012 and net customer additions of 256,000 in the second quarter of
2011.

The sequential and year-on-year change was driven by higher M2M
deactivations. M2M customers, which have significantly lower ARPUs
(averaging less than $2) than branded contract customers, totaled
2.8 million at June 30, 2012.

MVNO customers increased slightly in the second quarter of 2012,
totaling 3.8 million customers as of June 30, 2012.

Churn from branded customers was 2.9% in the second quarter of 2012,
down 30 basis points from both the first quarter of 2012 and the
second quarter of 2011.

Sequentially and year-on-year, branded churn decreased due in part
to churn reduction initiatives such as credit optimization efforts
and re-contracting its most loyal branded contract customers as
part of T-Mobile USA’s focus on improving its overall quality of
its branded customer base. Additionally, seasonally lower churn
was experienced industry-wide in the second quarter of 2012.
T-Mobile USA’s branded churn also benefitted year-on-year from the
discontinuation of certain products that had higher churn, such as
FlexPay Contract and FlexPay No Contract.

Branded contract churn, excluding M2M customers, was 2.1% in the
second quarter of 2012, down 40 basis points from the first quarter of
2012 and 50 basis points from the second quarter of 2011.

The sequential and year-on-year improvement in branded contract
churn was the result of T-Mobile USA’s continued churn reduction
initiatives, as mentioned above.

Branded prepaid churn, excluding MVNO, was 6.0% in the second quarter
of 2012, down 40 basis points from the first quarter of 2012 and down
60 basis points from the second quarter of 2011.

The sequential and year-on-year decrease in branded prepaid churn
was driven primarily by the strategic phase-out of high-churn
products, such as FlexPay No Contract.

ARPU Results

Quarter to Date

June 30,

March 31,

June 30,

Y-o-Y

2012

2012

2011

%∆

($)

ARPU (branded contract)4

57.35

57.68

57.26

0.2

%

ARPU (branded prepaid)4

26.81

25.39

23.60

13.6

%

ARPU (blended)4

43.88

44.52

45.86

(4.3

%)

Data ARPU (branded contract)5

19.16

18.84

16.72

14.6

%

Data ARPU (branded)5

17.21

16.94

15.25

12.9

%

Branded contract Average Revenue Per User (“ARPU”), excluding M2M
customers, was $57.35 in the second quarter of 2012, down slightly
from the first quarter of 2012, but up slightly from the second
quarter of 2011.

Sequentially, branded contract ARPU decreased due to lower voice
revenue, which included effects from the shift to Value plans.

Year-on-year, branded contract ARPU increased due primarily to
increases in data revenues and other fee revenues, including
reconnection fees. In addition, branded contract data ARPU of
$19.16 in the second quarter of 2012 increased 1.7% sequentially
and 14.6% year-on-year from the continued adoption of smartphones
and associated data plans. The year-on-year growth in branded
contract ARPU in the second quarter of 2012 slowed compared to the
year-on-year growth in the first quarter of 2012 due to a further
shift in the customer mix towards lower-priced rate plans,
including Value plans.

3G/4G smartphones used by contract customers account for 11.6
million or 54% of total branded contract customers, compared to
11.6 million or 53% in the first quarter of 2012 and 9.8 million
or 42% in the second quarter of 2011.

Branded prepaid ARPU, excluding MVNO customers, was $26.81 in the
second quarter of 2012, up 5.6% from the first quarter of 2012 and up
13.6% from the second quarter of 2011.

Sequentially and year-on-year, branded prepaid ARPU increased
primarily due to continued the success of unlimited Monthly4G
products.

Branded data ARPU in the second quarter of 2012 amounted to $17.21 per
branded customer, an increase of 1.6% from the first quarter of 2012
and 12.9% from the second quarter of 2011.

3G/4G smartphone sales were 2.1 million units in the second
quarter of 2012, down from 2.5 million units in the first quarter
of 2012, but a 31% increase from 1.6 million units sold in the
second quarter of 2011. Smartphone sales accounted for 71% of
units, or 86% of handset sales revenues, in the second quarter of
2012.

Blended ARPU was $43.88 in the second quarter of 2012, down from
$44.52 in the first quarter of 2012 and $45.86 in the second quarter
of 2011 primarily due to a change in portfolio mix towards branded
prepaid customers and wholesale customers, which traditionally have
lower ARPU.

Financial Results

Quarter to Date

June 30,

March 31,

June 30,

Y-o-Y

($ millions)

2012

2012

2011

%∆

Service revenues4

4,381

4,444

4,620

(5.2

%)

Total revenues

4,883

5,034

5,050

(3.3

%)

Adjusted OIBDA6

1,338

1,274

1,277

4.8

%

Adjusted OIBDA margin7

31

%

29

%

28

%

+3 pp

Capital expenditures8

539

747

688

(21.7

%)

Revenue

Service revenues were $4.4 billion in the second quarter of 2012, down
1.4% from the first quarter of 2012 and down 5.2% from the second
quarter of 2011.

Sequentially and year-on-year, quarterly service revenues
decreased primarily due to branded contract customer losses, which
were partially offset by the increased adoption of data plans in
the contract and prepaid customer base. Additionally, branded
prepaid revenues increased compared to the first quarter of 2012
and second quarter of 2011, a result of the continued success of
unlimited Monthly4G plans. Service revenues were also negatively
impacted by the growth in Value plans, which do not include
subsidized handset equipment. However, handset equipment sales
sold in connection with Value plans result in higher equipment
sales than traditional bundled price plans, as described below.

Data service revenues, including messaging, were $1.4 billion in
the second quarter of 2012, consistent with the first quarter of
2012 and up 5.6% from the second quarter of 2011. Data services
revenues, excluding messaging revenues, accounted for over 70% of
total data service revenues and increased 15.5% year-on-year.

Total revenues, including service, equipment sales, and other revenues
were $4.9 billion in the second quarter of 2012, down 3.0% from the
first quarter of 2012 and down 3.3% from the second quarter of 2011.

Compared to the first quarter of 2012 and the second quarter of
2011, total revenues changed due primarily to branded contract
customer losses, as described above. Additionally, equipment
revenues increased year-on-year, despite lower overall sales
volumes, due to handset program changes in connection with
T-Mobile USA’s Value plans and stronger smartphone sales. As a
result, total revenues declined less than service revenues
compared to the second quarter of 2011.

T-Mobile USA’s Value plans allow customers to subscribe to wireless
services without the purchase of or upfront payment for a bundled
handset, resulting in reduced initial costs, benefitting adjusted
OIBDA and net income within the quarter. Qualifying customers may
separately purchase handsets at any time, either deferring payments
over 20-month installment contracts or paying the full price at the
point-of-sale. Compared to traditional bundled price plans, Value
plans result in recording lower service revenues over the service
contract period, while recognizing higher equipment revenues at the
time of the sale.

Adjusted OIBDA

T-Mobile USA reported adjusted OIBDA of $1.34 billion in the second
quarter of 2012, up 5.0% from the first quarter of 2012 and up 4.8%
from the second quarter of 2011.

Adjusted OIBDA in the second quarter of 2012 excludes special
charges of $67 million, primarily consisting of employee severance
costs associated with restructuring initiatives announced in the
first and second quarter of 2012. Adjusted OIBDA in the first
quarter of 2012 and second quarter of 2011 excludes special
charges of $30 million and $13 million, respectively, primarily
consisting of employee retention benefit expenses related to the
terminated AT&T transaction.

Sequentially, adjusted OIBDA increased as a result of lower
operating expenses, excluding depreciation and amortization
expenses, which outpaced lower service revenues driven by branded
customer losses.

Year-on-year, adjusted OIBDA increased as a result of reduced
losses from equipment subsidies due to handset program changes
from the Value plans. In addition, adjusted OIBDA increased as a
result of decreased network expenses and continued cost management
programs.

Adjusted OIBDA margin was 31% in the second quarter of 2012, up from
29% in first quarter of 2012 and 28% in the second quarter of 2011.

Operating Expenses

Total operating expenses (excluding restructuring and AT&T
transaction-related costs) were $4.4 billion in the second quarter of
2012, down 3.2% from the first quarter of 2012 and 3.6% from the
second quarter of 2011.

Losses from equipment subsidies in the second quarter of 2012 were
$310 million (equipment revenues of $435 million, less cost of
equipment sales of $745 million), consistent with the first
quarter 2012 and down 38.1% from second quarter 2011. The
year-on-year decrease in net subsidy was due primarily to handset
program changes from the Value plans.

Equipment subsidies related to acquisition were $83 million in
the second quarter of 2012, down from $107 million in the
first quarter of 2012 and $261 million in the second quarter
of 2011.

Equipment subsidies related to retention were $227 million in
the second quarter of 2012, compared to $203 million in the
first quarter of 2012 and $240 million in the second quarter
of 2011.

Network expenses of $1.2 billion in the second quarter of 2012
were fairly consistent with the first quarter of 2012, but
decreased 5.6% from the second quarter of 2011. This year-on-year
decrease was due primarily to lower roaming expenses and reduced
rates of providing long distance service. Additionally, due to the
transition to enhanced backhaul (e.g. fiber), T-Mobile USA was
able to accommodate higher data volumes year-on-year without
significant increases in network costs.

Customer acquisition expenses in the second quarter of 2012 of
$751 million were fairly consistent with the first quarter of
2012, but decreased 4.6% from the second quarter of 2011. Compared
to the first quarter of 2012, lower commission expenses on lower
volumes were offset by higher advertising expenses associated with
new promotional campaigns. The year-on-year decrease was due
primarily to the shift in mix towards prepaid customers, resulting
in reduced commission expenses.

General and administrative expenses in the second quarter of 2012
of $871 million decreased 10.2% from the first quarter of 2012 but
were fairly consistent with the second quarter of 2011. This
sequential decrease was due primarily to lower bad debt expense
related to improved customer collection rates and lower upgrade
commission costs from fewer contract renewals. In addition,
general and administrative expenses benefitted sequentially and
year-on-year as a result of continued cost management programs.

Depreciation and amortization expenses of $819 million in the
second quarter of 2012 increased 9.6% from the first quarter of
2012 and 8.5% from the second quarter of 2011. The sequential and
year-on-year increase was primarily due to accelerated
depreciation recorded in the second quarter of 2012 for equipment
determined to be obsolete, which will be replaced or upgraded as
part of the LTE network modernization plan.

Capital Expenditures

Cash capital expenditures were $539 million in the second quarter of
2012, a decrease of 27.8% from the first quarter of 2012 and a
decrease of 21.7% from the second quarter of 2011.

Sequentially and year-on-year, payment timing contributed to lower
cash capital expenditures offset by higher incurred capex related
to the anticipated network modernization transformation. As a
result of the network modernization initiatives, capital
expenditures are expected to rise in the second half of 2012.

In the first quarter of 2012, T-Mobile USA announced that it will
invest $4 billion in total to strengthen its 4G network, including
the planned launch of LTE technology in 2013. Additionally,
T-Mobile USA recorded a $1.2 billion increase in spectrum licenses
as a result of the AWS spectrum received as part of the terminated
AT&T transaction.

T-MOBILE USA

Condensed Consolidated Balance Sheets

(dollars in millions)

(unaudited)

ASSETS

June 30,

December 31,

Current assets:

2012

2011

Cash and cash equivalents

$

423

$

390

Receivables from affiliates

602

1,820

Accounts receivable, net of allowances of $442 and $396, respectively

2,559

2,697

Inventory

444

455

Current portion of net deferred tax assets

681

668

Other current assets

676

572

Total current assets

5,385

6,602

Property and equipment, net of accumulated depreciation of $16,798
and $15,599, respectively

12,443

12,703

Goodwill

8,134

8,134

Spectrum licenses

13,918

12,814

Other intangible assets, net of accumulated amortization of $232
and $216, respectively

* In the second quarter of 2012, spectrum licenses received in
connection with the terminated AT&T transaction were transferred
from Deutsche Telekom in a non-cash exchange for receivables held by
Deutsche Telekom on T-Mobile USA's behalf.

This press release includes non-GAAP financial measures. The
non-GAAP financial measures should be considered in addition to,
but not as a substitute for, the information provided in
accordance with GAAP. Reconciliations from the non-GAAP financial
measures to the most directly comparable GAAP financial measures
are provided below following Selected Data and the financial
statements.

This news release includes “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. The
statements in this news release regarding the business outlook, expected
performance and forward-looking guidance, as well as other statements
that are not historical facts, are forward-looking statements. The words
“estimate,” “project,” “forecast,” “intend,” “expect,” “believe,”
“target,” “providing guidance” and similar expressions are intended to
identify forward-looking statements.

Forward-looking statements are estimates and projections reflecting
management’s judgment based on currently available information and
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the forward-looking
statements. With respect to these forward-looking statements, management
has made assumptions regarding, among other things, customer and network
usage, customer growth and retention, pricing, operating costs, the
timing of various events and the economic and regulatory environment.

About T-Mobile USA

Based in Bellevue, Wash., T-Mobile USA, Inc. is the U.S. wireless
operation of Deutsche Telekom AG (OTCQX: DTEGY). By the end of the
second quarter of 2012, approximately 130 million mobile customers were
served by the mobile communication segments of the Deutsche Telekom
group — 33.2 million by T-Mobile USA — all via a common technology
platform based on GSM and UMTS and additionally HSPA+ 21/HSPA+ 42.
T-Mobile USA’s innovative wireless products and services help empower
people to connect to those who matter most. Multiple independent
research studies continue to rank T-Mobile USA among the highest in
numerous regions throughout the U.S. in wireless customer care and call
quality.

In order to provide comparability with the results of other US wireless
carriers, all financial amounts are in US dollars and are based on
accounting principles generally accepted in the United States (“GAAP”).
T-Mobile USA results are included in the consolidated results of
Deutsche Telekom, but differ from the information contained herein as,
among other things, Deutsche Telekom reports financial results in Euros
and in accordance with International Financial Reporting Standards
(IFRS).

Since all companies do not calculate these figures in the same manner,
the information contained in this press release may not be comparable to
similarly titled measures reported by other companies.

A customer is defined as a SIM card with a unique T-Mobile USA mobile
identity number which generates revenue. Branded contract and prepaid
customers include FlexPay customers depending on the type of rate plan
selected. FlexPay customers with a contract are included in branded
contract customers, and FlexPay customers without a contract are
included in branded prepaid customers. Additionally,
machine-to-machine customers (also known as M2M) are included within
contract customers, some of which may not have monthly recurring
charges required under contract. Mobile virtual network operators
(MVNO) are classified as prepaid customers as they most closely align
with this customer segment.

Prior quarter amounts have been restated to conform to current period
customer reporting classifications.

Churn is defined as the number of customers whose service was
discontinued, expressed as a rounded monthly percentage of the average
number of customers during the specified period. We believe that
churn, which is a measure of customer retention and loyalty, provides
relevant and useful information and is used by our management to
evaluate the operating performance of our business.

Average Revenue Per User (“ARPU”) represents the average monthly
service revenue earned from customers. ARPU is calculated by dividing
service revenues for the specified period by the average customers
during the period, and further dividing by the number of months in the
period and rounding to the nearest dollar. We believe ARPU provides
management with useful information to evaluate the revenues generated
from our customer base.

Service revenues include contract,
prepaid, and roaming and other service revenues, and do not include
equipment sales and other revenues. Data services revenues (including
messaging and non-messaging revenue) are a non-GAAP financial measure
and are included in the various components of service revenues.
Handset insurance revenues are included in contract service revenues.

Data ARPU is defined as total data revenues divided by average total
customers during the period, rounded to the nearest ten cents. Total
data revenues include data revenues from contract customers, prepaid
customers, Wi-Fi revenues and data roaming revenues. Branded data
revenues exclude data revenues from M2M customers, MVNO, Wi-Fi
revenues and data roaming revenues. The relative value of data
revenues from bundled unlimited voice and data plans (including a
relative value for messaging and non-messaging data revenue) are
included in total data revenues.

Operating Income Before Interest, Depreciation, Amortization and
Impairment (“OIBDA”) is a non-GAAP financial measure, which we define
as operating income before depreciation, amortization and impairment
charges. In a capital-intensive industry such as wireless
telecommunications, we believe OIBDA, as well as the associated
percentage margin calculation, to be meaningful measures of our
operating performance. OIBDA should not be construed as an alternative
to operating income or net income as determined in accordance with
GAAP, as an alternative to cash flows from operating activities as
determined in accordance with GAAP or as a measure of liquidity. We
use OIBDA as an integral part of our planning and internal financial
reporting processes, to evaluate the performance of our business by
senior management and to compare our performance with that of many of
our competitors. We believe that operating income is the financial
measure calculated and presented in accordance with GAAP that is the
most directly comparable to OIBDA. OIBDA is adjusted to exclude
impairment changes, AT&T transaction-related costs and restructuring
charges that are not reflective of our ongoing operating performance.

Adjusted OIBDA margin is a non-GAAP financial measure, which we define
as adjusted OIBDA (as described in Note 6 above) divided by service
revenues.

Capital expenditures consist of amounts paid for construction and the
purchase of property and equipment.

High speed packet access plus (HSPA+ 21 and HSPA+ 42 technologies)
offers customers a 4G experience, including data speeds comparable to
other 4G network speeds currently available to mobile device users in
the United States.